<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) August 10, 1996
------------------------------
Alpha Microsystems
- -------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
California 0-10558 95-3108178
- -------------------------------------------------------------------------------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
2722 South Fairview Street, Santa Ana, California 92704
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (714) 957-8500
--------------------------
Not Applicable
- -------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE> 2
INFORMATION TO BE INCLUDED IN THE REPORT
Item 2. Acquisition or Disposition of Assets.
On August 10, 1996, Alpha Microsystems, a California corporation (the
"Company"), entered into an agreement (the "Agreement") for the sale of the
entire issued share capital of Alpha Microsystems (Great Britain) Limited (the
"Subsidiary"), with Sanderson Electronics PLC ("the "Purchaser"). The sale was
consummated on August 19, 1996.
Pursuant to the Agreement, the Company agreed to sell all of the
1,723,548 issued and outstanding ordinary shares of the Subsidiary to the
Purchaser in exchange for 907,792 ordinary shares of the Purchaser (the
"Purchase Price") valued at approximately $2,083,000 as of August 13, 1996. The
Purchase Price was determined based upon the net assets of the Subsidiary, its
past financial performance, and structural issues related to the Subsidiary, and
was the result of substantial negotiations with the Purchaser, an independent
third party. In conjunction with this agreement the Company and Sanderson
signed a three year hardware distribution agreement allowing Sanderson to sell
Alpha Microsystems hardware products in the United Kingdom and Eire. Except for
the Agreement and the products distribution agreement mentioned above, there is
no material relationship between the Purchaser and the Company or any of the
Company's affiliates, directors or officers or any associate of any director or
officer of the Company. In connection with the Agreement, the Company has
granted to the Purchaser the right to use the names "Alpha Micro" and "Alpha
Microsystems" in connection with the Subsidiary's hardware distribution and
service business for a period of up to 3 years after the closing of the
transactions contemplated by the Agreement. The Company may, however, terminate
the Purchaser's right to utilize those names on not less than three months'
notice in certain events. In addition, the Company has granted a license to the
Purchaser enabling the Purchaser to utilize certain trademarks of the Company in
connection with the operation of the business of the Subsidiary. No additional
consideration is being paid in connection with the grant of such licenses. The
Subsidiary has a number of active and inactive subsidiaries, each of which will
remain a subsidiary of the Subsidiary and, will be indirectly owned by the
Purchaser. The active subsidiaries include Sabre Business Systems Limited, a
corporation registered in Northern Ireland, Sabre Business Systems Limited, a
corporation registered in Ireland, and Sabre Software Developments Limited, a
corporation registered in Eire.
As part of the sale agreement, the Company has agreed to negotiate in
good faith toward developing a strategic alliance with Sanderson, whereby
Sanderson would distribute and market the Company's AlphaCONNECT family of
products in the United Kingdom and potentially in Southeast Asia. Sanderson has
significant distribution channels in these geographic areas.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(b) Pro Forma Financial Information. The following pro forma
financial information is provided with this report:
(i) Unaudited Pro Forma Condensed Consolidated Balance
Sheet as of May 26, 1996
(ii) Unaudited Pro Forma Condensed Consolidated Statement
of Operations for the Fiscal Quarter Ended May 26,
1996
(iii) Unaudited Pro Forma Condensed Consolidated Statement
of Operations for the Fiscal Year Ended
February 25, 1996
(iv) Notes to Unaudited Pro Forma Consolidated Financial
Statements
-2-
<PAGE> 3
(c) Exhibits. The following exhibits are included with this
report:
Item Exhibit No.
- ---- ----------
Agreement between Registrant and Sanderson
Electronics PLC dated August 10, 1996 2
Press Release 99
-3-
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: August 21, 1996 ALPHA MICROSYSTEMS
By: /S/ Douglas J. Tullio
------------------------------
Douglas J. Tullio,
President and Chief Executive
Officer
-4-
<PAGE> 5
ALPHA MICROSYSTEMS
UNAUDITED PRO FORMA FINANCIAL DATA
On August 10, 1996 the Company agreed to sell Alpha Microsystems (Great Britain)
Limited ("AMGB"), a corporation registered in the United Kingdom, and its
subsidiaries, to Sanderson Electronics PLC ("Sanderson") for 907,792
unrestricted ordinary shares of Sanderson stock. Sanderson is listed on the
London Stock Exchange and the value per share at August 13, 1996 was (pound
sterling) 1.48 per share, which translates into a fair market value of
$2,083,000. Sanderson's current market capitalization is over $90 million and
its current number of shares outstanding are approximately 42 million.
Sanderson's fiscal 1995 results include revenues in excess of $88 million and
profits before tax of approximately $8 million.
The following unaudited Pro Forma Condensed Consolidated Balance Sheet is
presented as if the sale of AMGB had occurred on May 26, 1996. The following
unaudited Pro Forma Condensed Consolidated Statements of Operations for the
three months ended May 26, 1996 and the year ended February 25, 1996 are
presented as if the sale of AMGB had occurred on February 25, 1996 and February
26, 1995, respectively. The pro forma adjustments represent the Company's
determination of all material adjustments necessary to present fairly the
Company's pro forma results of operations and financial position and are based
upon available information and certain assumptions considered reasonable in the
circumstances.
The following pro forma financial information should be read in conjunction with
the historical financial statements and notes thereto of the Company filed on
Forms 10-K and 10-Q for the respective periods. The pro forma results of
operations are not necessarily indicative of the actual results that would have
occurred had the sale been consummated at the beginning of the period indicated
and do not purport to indicate results of operations as of any future date or
for any future period.
<PAGE> 6
ALPHA MICROSYSTEMS
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MAY 26, 1996
(In thousands, except share data)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
Consolidated (Note A) Consolidated
------------ ----------- ------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,673 $ (782) $ 891
Marketable securities -- 2,083 2,083
Accounts receivable, net 4,300 (1,564) 2,736
Inventories 854 (562) 292
Note receivable 107 -- 107
Prepaid expenses and other current assets 470 (161) 309
-------- -------- --------
Total current assets 7,404 (986) 6,418
Property and equipment, at cost 16,779 (750) 16,029
Less accumulated depreciation and amortization 12,797 (611) 12,186
-------- -------- --------
Net property and equipment 3,982 (139) 3,843
Service contracts, net 650 -- 650
Software costs, net 632 -- 632
Goodwill, net 168 (140) 28
Other assets, net 116 (49) 67
-------- -------- --------
$ 12,952 $ (1,314) $ 11,638
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank borrowings $ 500 $ -- $ 500
Accounts payable 1,539 (537) 1,002
Deferred revenue 2,309 (310) 1,999
Other accrued liabilities 762 (414) 348
Accrued salaries and wages 248 (71) 177
Current portion of long-term debt 138 -- 138
-------- -------- --------
Total current liabilities 5,496 (1,332) 4,164
Long-term debt 197 -- 197
Commitments and contingencies
Shareholders' equity:
Preferred stock, no par value; 5,000,000
shares authorized; none issued -- -- --
Common stock, no par value; 20,000,000 shares
authorized; 6,929,523 shares
issued and outstanding at May 26, 1996 22,412 -- 22,412
Accumulated deficit (15,038) (165) (15,203)
Unamortized restricted stock plan expense (18) -- (18)
Foreign currency translation adjustment (97) 183 86
-------- -------- --------
Total shareholders' equity 7,259 18 7,277
-------- -------- --------
$ 12,952 $ (1,314) $ 11,638
======== ======== ========
</TABLE>
See accompanying Notes to the Unaudited Pro Forma Consolidated Financial
Statements.
<PAGE> 7
ALPHA MICROSYSTEMS
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended February 25, 1996
(In thousands, except per share data)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
Consolidated (Note A) Consolidated
------------ ----------- ------------
<S> <C> <C> <C>
Net sales:
Product $ 14,466 $ (3,744) $ 10,722
Service 18,297 (3,357) 14,940
-------- -------- --------
Total net sales 32,763 (7,101) 25,662
-------- -------- --------
Cost of sales:
Product 10,228 (2,413) 7,815
Service 12,739 (1,568) 11,171
-------- -------- --------
Total cost of sales 22,967 (3,981) 18,986
-------- -------- --------
Gross Margin 9,796 (3,120) 6,676
Selling, general and administrative expense 11,855 (3,238) 8,617
Research and development expense 2,093 -- 2,093
-------- -------- --------
Total operating expenses 13,948 (3,238) 10,710
-------- -------- --------
Income (loss) from operations (4,152) 118 (4,034)
Interest income (93) (7) (100)
Interest expense 38 -- 38
Other (income) expense, net (466) (27) (493)
Foreign exchange (gain) loss (76) 77 1
-------- -------- --------
Total other (income) expenses (597) 43 (554)
-------- -------- --------
Income (loss) before taxes (3,555) 75 (3,480)
(Benefit) provision for income taxes 20 (19) 1
-------- -------- --------
Net income (loss) $ (3,575) $ 94 $ (3,481)
======== ======== ========
Net income (loss) per share $ (0.54) $ 0.01 $ (0.53)
======== ======== ========
Number of shares used in the
computation of per share amounts 6,565 6,565 6,565
======== ======== ========
</TABLE>
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated
Financial Statements.
<PAGE> 8
ALPHA MICROSYSTEMS
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Ended May 26, 1996
(In thousands, except per share data)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
Consolidated (Note A) Consolidated
------------ ----------- ------------
<S> <C> <C> <C>
Net sales:
Product $ 2,798 $ (824) $ 1,974
Service 4,278 (766) 3,512
------- ------- -------
Total net sales 7,076 (1,590) 5,486
------- ------- -------
Cost of sales:
Product 1,495 (367) 1,128
Service 3,234 (389) 2,845
------- ------- -------
Total cost of sales 4,729 (756) 3,973
------- ------- -------
Gross Margin 2,347 (834) 1,513
Selling, general and administrative expense 2,199 (645) 1,554
Research and development expense 557 -- 557
------- ------- -------
Total operating expenses 2,756 (645) 2,111
------- ------- -------
Income (loss) from operations (409) (189) (598)
Interest income (4) (4) (8)
Interest expense 16 -- 16
Other (income) expense, net (75) (31) (106)
Foreign exchange (gain) loss (7) 7 --
------- ------- -------
Total other (income) expenses (70) (28) (98)
------- ------- -------
Income (loss) before taxes (339) (161) (500)
(Benefit) provision for income taxes 5 4 9
------- ------- -------
Net income (loss) $ (344) $ (165) $ (509)
======= ======= =======
Net income (loss) per share $ (0.05) $ (0.02) $ (0.07)
======= ======= =======
Number of shares used in the
computation of per share amounts 6,869 6,869 6,869
======= ======= =======
</TABLE>
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated
Financial Statements.
<PAGE> 9
ALPHA MICROSYSTEMS
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(A) To reflect the disposition of the Alpha Microsystems (Great Britain)
Limited ("AMGB") operations, a former wholly-owned subsidiary, to
Sanderson Electronics PLC ("Sanderson") for 907,792 unregistered
ordinary shares of Sanderson stock, listed on the London Exchange and
valued at $2,083,000 based upon the closing price of the shares as of
August 13, 1996. Sanderson registered the above shares with the
London Stock Exchange on August 19, 1996.
Like any securities of this nature, there are significant risks
associated with market and exchange rate fluctuations and the
associated with these securities can be best assessed by reviewing the
information filed by Sanderson with the London Stock Exchange. These
securities are classified as short-term marketable securities held for
sale.
To reflect the three year agreement for hardware distribution between
Sanderson and the Company at comparable terms extended to AMGB
during the pro forma periods, the Company has recognized in the
Unaudited Pro Forma Condensed Consolidated Statements of Operations
revenue of $1,147,000 for the twelve months ended February 25, 1996 and
$320,000 for the three months ended May 26, 1996.
<PAGE> 1
EXHIBIT 2
DATED 10 AUGUST 1996
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(1) ALPHA MICROSYSTEMS
AND
(2) SANDERSON ELECTRONICS PLC
------------------------------------------
A G R E E M E N T
FOR THE SALE AND PURCHASE OF THE
ENTIRE ISSUED SHARE CAPITAL OF
ALPHA MICROSYSTEMS (GREAT BRITAIN) LIMITED
(COMPANY NUMBER 1623460)
------------------------------------------
<PAGE> 2
<TABLE>
<CAPTION>
CONTENTS
- --------
<S> <C>
1. INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3. CONSIDERATION SHARES . . . . . . . . . . . . . . . . . . . . . . . 7
4. WARRANTIES AND LIABILITY LIMITATIONS . . . . . . . . . . . . . . . 7
5. COMPLETION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6. RESTRICTIVE COVENANTS/CONFIDENTIAL INFORMATION . . . . . . . . . . 8
7. NAME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
8. ALPHACONNECT . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
9. LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
10. ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
11. AMENDMENT AND WAIVER . . . . . . . . . . . . . . . . . . . . . . . 10
12. RIGHTS CUMULATIVE . . . . . . . . . . . . . . . . . . . . . . . . . 11
13. TIME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
14. VENDOR REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . . . 11
15. PUBLICITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
16. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
17. COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
18. ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . 12
19. WAIVER OF RIGHTS BASED ON MISREPRESENTATIONS . . . . . . . . . . . 13
20. SURVIVORSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
21. LAW AND JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . 13
SCHEDULE 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Part 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Part 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
TRADING SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . 16
Part 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
DORMANT SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
SCHEDULE 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
THE WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . 18
PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
FINANCIAL/TAX WARRANTIES . . . . . . . . . . . . . . . . . . . . . 18
PART II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
GENERAL WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . 22
SCHEDULE 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
COMPLETION REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . 27
SCHEDULE 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
THE PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SCHEDULE 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
VENDOR PROTECTION . . . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
<PAGE> 4
THIS AGREEMENT is made on 10 August 1996
BETWEEN:
(1) ALPHA MICROSYSTEMS (a company registered in California) whose
principal place of business is at 2722 South Fairview, Santa Ana,
CA 92704, USA (the "Vendor"); and
(2) SANDERSON ELECTRONICS PLC (registered in England and Wales under
Company No 2131240) whose registered office is at Parkway House,
Parkway Avenue, Sheffield, S9 4WA (the "Purchaser").
1. INTERPRETATION
1.1 In this agreement, unless the context requires otherwise:
"Audited Accounts" means the audited financial
statements of the Company or a
Subsidiary (as appropriate) for the
financial year ended on the Accounts
Date comprising its individual
accounts and cash flow statement and
the directors' and auditors' reports;
"Accounts Date" means 25 February 1996;
"AMB Note" means a loan note issued by Alpha
Microsystems Belgium S.A. in favour
of the Company, the book value of
which is (Pound)185,873.61 together
with all interest and other amounts
due under or in respect thereof;
"AMOS Agreement" has the meaning ascribed to it
in clause 7;
"Claim" any claim for breach of or
non-compliance with any of the Sale
Documents (including any Warranty
Claim or any Indemnity Claim);
"Company" means Alpha Microsystems (Great
Britain) Limited a company registered
in England and Wales under number
1623460 details of which are set out
in Part 1 of Schedule 1;
"Companies Act" means the Companies Act 1985
(as amended);
"Completion" means completion of the sale
and purchase of the Sale Shares in
accordance with clause 5;
"Completion Date" means the date for Completion
in accordance with clause 5;
"Condition" means the condition precedent to
this agreement set out in clause 2.4;
"Consideration Shares" means 907,792 ordinary shares of
five pence each in the Purchaser, to
be issued credited as fully paid up;
1
<PAGE> 5
"Disclosure Letter" means the letter (with the
attachments specified in it)
identified as such, written by the
Vendor to the Purchaser in agreed
terms and delivered before exchange
of this agreement;
"Dormant Subsidiaries" means the companies detailed in Part
3 of Schedule 1;
"Encumbrance" means any interest or equity of
any person (including, without
limitation, any right to acquire,
option or right of pre-emption), any
mortgage, charge, pledge, lien,
assignment, hypothecation, security
interest, title retention or any
other security agreement or
arrangement affecting property of any
kind (or rights in it);
"Group" means the Company and any or all of
the Subsidiaries;
"Indemnity Claim" means any claim under the Tax
Covenant;
"Intellectual Property" means patents, trade marks, service
marks, registered designs, utility
models, applications for and rights
to apply for any of the foregoing,
unregistered design rights, trade
marks and service marks, trade or
business names and copyright, any
rights in any invention, discovery or
process, confidential information or
knowhow, and any similar rights in
any country;
"Inter-Company Debt" means the amount of (Pound)388,376
due from the Company to the Vendor
under the terms of a promissory note;
"London Stock Exchange" means the London Stock Exchange
Limited;
"Management Accounts" means the management accounts
for the Company and the Trading
Subsidiaries comprising profit and
loss accounts for the period from the
Accounts Date to 21 July 1996 and
balance sheets as at that date as
annexed to the Disclosure Letter;
"Name" means "Alpha Micro" or "Alpha
Microsystems";
"Property" means the leasehold properties
detailed in Schedule 4;
"Purchaser Group" means the Purchaser and any of
its subsidiaries from time to time;
"Sale Documents" means this agreement and the
Tax Covenant and the Disclosure
Letter;
"Sale Shares" means the 1,723,548 ordinary shares
of (Pound)1 each in the capital of
the Company to be bought and sold
pursuant to clause 2 (particulars of
which are set out in Part 1 of
Schedule 1);
"Pension Schemes" means the Alpha Microsystems (GB)
Limited Executive Pension Plan
2
<PAGE> 6
or established by declaration of trust
"Schemes" dated 1 October 1993 and the Alpha
Microsystems (GB) Limited
Contracted-out Pension Plan
established by declaration of trust
dated 6 April 1988 and including the
life assurance cover provided to
those employees eligible to join
either scheme;
"Subsidiaries" means the Trading Subsidiaries
and the Dormant Subsidiaries;
"TCGA" means the Taxation of Chargeable
Gains Act 1992;
"Tax" means within the United Kingdom,
corporation tax, advance corporation
tax, income tax (including income tax
required to be deducted or withheld
from or accounted for in respect of
any payment), capital gains tax,
capital transfer tax, inheritance
tax, VAT, national insurance
contributions, capital duty, stamp
duty, stamp duty reserve tax, duties
of customs and excise, any amount
recoverable under Section 601 of the
Taxes Act and any other taxes,
levies, duties, charges, imposts or
withholdings corresponding to,
similar to, replaced by or replacing
any of them, together with all
penalties, charges and interest
relating to any of them regardless of
whether any such taxes, levies,
duties, imposts, charges,
withholding, penalties, and interest
are chargeable directly or primarily
against or attributable directly or
primarily to the Company, or any
other person and of whether any
amount in respect of any of them is
recoverable from any other person;
"Tax Authority" means any taxing or other authority
competent to impose any Tax
liability;
"Tax Claim" means any claim under the Tax
Covenant or the Warranties relating
to Tax;
"Tax Covenant" means the tax covenant in agreed
terms;
"Taxes Act" means the Income and Corporation
Taxes Act 1988;
"Trading Subsidiaries" means the companies detailed in
Part 2 of Schedule 1;
"VAT" means value added tax together
with all fines, penalties, costs,
charges and expenses relating to any
liability to value added tax;
"VATA" means the Value Added Tax Act 1994;
3
<PAGE> 7
"Vendor Group" means the Vendor and any of its
subsidiaries from time to time;
"Vendor's Solicitors" means Dibb Lupton Broomhead of
Fountain Precinct, Balm Green,
Sheffield S1 1RZ (ref: JMW);
"Warranties" means the warranties, undertakings
and representations set out in
Schedule 2; and
"Warranty Claim" means any claim from breach of
the Warranties.
1.2 In this agreement, where the context admits:
1.2.1 words and phrases which are defined or referred to in
section 262A or Part XXVI of the Companies Act have
the same meanings as in the Companies Act (unless
otherwise expressly defined in this agreement or the
other Sale Documents (as the case may be));
1.2.2 sections 5, 6, 8 and 9 of and Schedule 1 to the
Interpretation Act 1978 apply in the same way as
they do to Acts;
1.2.3 any reference to a statutory provision includes
reference to:
1.2.3.1 any order, regulation, statutory instrument
or other subsidiary legislation at any time
made under it and in force at the date
hereof;
1.2.3.2 any modification, amendment, consolidation,
re-enactment or replacement of it or
provision of which it is a modification,
amendment, consolidation, re-enactment or
replacement in force at the date hereof;
1.2.4 reference to a clause, sub-clause, schedule or
paragraph is to a clause, sub-clause, schedule or a
paragraph of a schedule of or to this agreement
respectively;
1.2.5 reference to the parties to this agreement includes
their permitted assigns and personal representatives;
1.2.6 section 839 of the Taxes Act applies as it applies in
that Act, to determine whether one person is
connected with another;
4
<PAGE> 8
1.2.7 reference to any document being "in agreed terms" is
to that document in the form agreed and, for
identification purposes, signed by or on behalf of
the parties;
1.2.8 reference to persons includes corporations and
unincorporated associations and partnerships and vice
versa, and reference to any party to this agreement
comprising more than one person includes each person
constituting that party;
1.2.9 reference to any professional firm or company
includes any firm or company effectively succeeding
to the whole, or substantially the whole, of its
practice or business; and
1.2.10 headings and any descriptive notes are for ease of
reference only and shall not affect the construction
or interpretation of this agreement and the other
Sale Documents.
1.3 This agreement incorporates the schedules to it.
1.4 Reference to the "Company" shall in relation to the Warranties
(unless the context otherwise requires) be deemed to include
each, all and any Trading Subsidiary and this agreement shall
be construed as applying to each, all and any Trading
Subsidiary as if each, all and any of them were the "Company"
referred to in the Warranties.
2. SALE AND CONDITIONS
-------------------
2.1 Subject to the terms of this agreement and on the basis of the
Warranties, the Vendor shall sell or procure the sale of free
from Encumbrances and the Purchaser shall purchase the Sale
Shares together with all rights now or after the date of this
agreement attaching to them (including all unpaid dividends
and other distributions declared or made as at the date of
this agreement).
2.2 Subject to the terms of this agreement, the Vendor covenants
that, in relation to the Sale Shares.
2.2.1 the Vendor has good right to sell and transfer them;
2.2.2 the Purchaser will have quiet possession and
enjoyment of them;
5
<PAGE> 9
2.2.3 they are free from Encumbrance; and
2.2.4 the Vendor will take any steps reasonably requested by
the Purchaser to perfect the Purchaser's title to
them.
2.3 The Vendor waives and agrees to procure the waiver of any
pre-emption rights which it or any third party may have
relating to the Sale Shares, whether conferred by the
Company's articles of association or otherwise.
2.4 2.4.1 This agreement (other than in respect of the parties'
obligations under this clause 2.4) is conditional
upon the admission by the London Stock Exchange of
the Consideration Shares to listing and such listing
becoming fully effective.
If the Condition is not satisfied on or before 23
August 1996 or any other date agreed in writing by
the parties, this agreement shall cease to have
effect and neither party shall have any claim under
it except in respect of any breach of this clause
2.4.
2.4.2 The Purchaser shall use its best endeavours to
procure that this agreement becomes unconditional.
2.5 The Vendor agrees with the Purchaser that, during the period
between exchange of this agreement and Completion, it will
procure that no member of the Group shall:
2.5.1 depart from the ordinary course of the conduct of its
business as conducted in the financial year ending on
the Accounts Date;
2.5.2 declare, make or pay any dividend or other
distribution or make any other payment to the Vendor
(other than for goods and services in the ordinary
course as set out in the Disclosure Letter);
2.5.3 create, issue, redeem or grant any option in respect
of any part of its loan or share capital or agree to
do so; or
2.5.4 (other than in the ordinary course of business)
amend, alter, terminate or propose any amendment,
alteration or the termination of any material
contract or agreement (including any service
contract) to which any member of the Group is a
party.
6
<PAGE> 10
3. CONSIDERATION SHARES
--------------------
3.1 The consideration for the Sale Shares is the issue and
allotment of the Consideration Shares, credited as fully paid
up.
3.2 The Consideration Shares shall be allotted to rank pari passu
with the ordinary shares in the capital of the Purchaser in
issue at the date of allotment (including the right to receive
all dividends and other distributions declared, made or paid
after the date of allotment).
4. WARRANTIES AND LIABILITY LIMITATIONS
---------------------------------------
4.1 The Vendor warrants to the Purchaser that each of the
Warranties is true and accurate in all material respects.
4.2 The Vendor agrees with the Purchaser to waive any right it may
have in respect of any inaccuracy or omission in or from any
information or advice supplied or given by the Company and any
officers or employees of the Company in connection with the
Sale Documents, and agrees that any such advice or information
does not constitute a representation and that no warranty or
guarantee has been given in respect of its accuracy.
4.3 The rights and remedies of the Purchaser or any amount
recoverable shall not be affected by Completion.
4.4 Each of the Warranties is separate and independent and (except
as otherwise expressly provided) is not limited or restricted
by reference to or inference from the terms of any other
provision of this agreement.
4.5 Where any of the Warranties is qualified by an expression such
as "so far as the Vendor is aware" or "to the best of the
knowledge information and belief of the Vendor" or any similar
expression, it shall be deemed to include an additional
statement that it has been made after enquiry of Peter White
and Susan Deignan (but not further or otherwise).
4.6 The provisions of Schedule 5 shall apply to limit and regulate
the rights of the parties under the Sale Documents.
7
<PAGE> 11
5. COMPLETION
----------
Completion shall take place at the offices of the Vendor's Solicitors
within three days of satisfaction of the Condition when each party
shall do what is specified in Schedule 3.
6. RESTRICTIVE COVENANTS/CONFIDENTIAL INFORMATION
------------------------------------------------
6.1 The Vendor agrees (on behalf of itself and each member of the
Vendor Group) with the Purchaser that the Vendor Group shall
not for a period of three years from Completion carry on or be
directly or indirectly concerned or interested in any business
in the United Kingdom or Eire (the "Territory") which competes
with the businesses of the Group as carried on at Completion
insofar as such businesses relate to products utilising or
incorporating the AMOS proprietary operating system PROVIDED
ALWAYS THAT this covenant shall cease to apply if the Group
ceases to actively market the products in the Territory.
6.2 The Vendor undertakes to the Purchaser that it will not
(except as required by law) divulge or communicate to any
person (other than to any officer or employee of the Group who
needs that knowledge in the discharge of his duties) any
confidential information concerning the business, customers,
accounts, financial or contractual arrangements, transactions
or affairs of the Group which may be within or come to its
knowledge to the extent and so long as that information is
confidential and not in the public domain.
7. NAME
----
7.1 The Vendor agrees that the Company may continue to use the
Name as part of its corporate name and in connection with the
Company's hardware distribution and service business only for a
period of up to three years after Completion subject to the
Vendor being able to terminate such right on three months'
notice (a) following the lawful termination by the Vendor of
the agreement dated 10 August 1996 and made between (1) the
Vendor and (2) the Company (pursuant to which the Vendor
appoints the Company as a distributor of its AMOS products)
(the "AMOS Agreement") (unless the AMOS Agreement is renewed or
replaced) or (b) if the Company commences to sell products
which are competitive with those being marketed by the Vendor
and provided that the Company may continue to use the Name
after the expiry of the period of three years subject to the
Vendor being able to terminate such right on three months'
notice at any time PROVIDED ALWAYS THAT the Purchaser
acknowledges that the right to use the Name is intended to be
restricted to the Territory (as defined in clause 6.1) and the
Purchaser agrees that the Company shall not use the Name as a
trading or business name
8
<PAGE> 12
outside the Territory (save to the extent reasonably necessary
as an incidental part of carrying on business in the
Territory).
7.2 Upon the termination of the right to use the Name in
accordance with clause 7.1, the Purchaser shall procure that:
7.2.1 the Company and any relevant subsidiary changes its
corporate name so that it no longer includes the Name
or any part or any similar words visually or
phonetically;
7.2.2 the Vendor is provided promptly following such name
change with a copy of the relevant change of name
certificate(s);
7.2.3 no company in the Purchaser Group shall adopt a name
or use a business name containing the Name or any
part or any similar words visually or phonetically.
7.2(A) The Vendor agrees that its sole remedy for any breach of
clauses 7.1 and 7.2 shall be the right to require the Company
to cease using the Name and to change its corporate name in
accordance with clause 7.2 within 90 days of the breach.
7.3 The Vendor agrees to grant licences to the Company in respect
of the following trade mark to enable the Company to use them
in connection with its business and to give effect to clause
7.1:
Mark No.
---- ---
[S] [C]
ALPHA MICRO 1,156,737
ALPHA COBOL 1,241,903
ALPHALAN 1,383,459 #
# Note: currently registered in the name of the Company but
to be transferred to the Vendor before Completion.
8. ALPHACONNECT
------------
The parties agree to negotiate in good faith with a view to a member
of the Purchaser's Group being appointed as a European distributor of
the Vendor's software product "AlphaConnect".
9
<PAGE> 13
9. LIABILITIES
-----------
The Vendor undertakes to procure that the Group is unconditionally and
absolutely released from all and any liability it may have under any
guarantee, suretyship, indemnity or other obligation or arrangement
for or in respect of the liabilities of the Vendor or any person now
or formerly connected with the Vendor and pending such release the
Vendor shall keep the Group and the Purchaser fully and effectually
indemnified against all and any liability suffered or incurred by the
Group or the Purchaser in respect thereof.
10. ASSIGNMENT
----------
This agreement is binding upon and shall enure for the benefit of the
successors of the parties but shall not be assignable.
11. AMENDMENT AND WAIVER
--------------------
11.1 No variation of this agreement shall be effective unless made
in writing and signed by all the parties.
11.2 No waiver of any term provision or condition of this agreement
shall be effective except to the extent made in writing and
signed by the waiving party.
11.3 No omission or delay on the part of any party in exercising
any right power or privilege under this agreement shall
operate as a waiver by it of any right to exercise it in
future or of any other of its rights under this agreement.
11.4 Completion of this agreement does not constitute a waiver by
the Purchaser of any breach of any provision of this agreement
known to the Purchaser at that time.
12. RIGHTS CUMULATIVE
-----------------
All rights conferred upon the Purchaser under this agreement are
additional and without prejudice to any other rights and remedies
available to it.
13. TIME
----
Time shall be of the essence of this agreement.
10
<PAGE> 14
14. VENDOR REQUIREMENTS
-------------------
The Purchaser shall procure that during the period of two years after
Completion the Group shall provide to the Vendor (at the Vendor's
cost) such information as the Vendor may reasonably request for the
purpose of enabling the Vendor to prepare its financial and fiscal
statements, reports and returns in respect of periods during which the
Group was owned by the Vendor.
15. PUBLICITY
---------
No announcement or disclosure in respect of the making or terms of
this agreement shall be made or disclosed by either Party without the
prior written consent of the other (except to the extent required by
the law of any jurisdiction or by the rules of the London Stock
Exchange, the Nasdaq National Market or any other regulated investment
exchange).
16. NOTICES
-------
16.1 Any notice or other document to be served under this agreement
must be in writing and may be delivered or sent by pre-paid
first class air mail letter post or facsimile transmission to
the party to be served at that party's address above or at
such other address or number as that party may from time to
time notify in writing to the other party to this agreement.
Any notice or other document to be served on the Vendor shall
be copied to the Vendor's Solicitors (for the attention of
Julia Wood, Andrew Darwin and Andrew Price).
16.2 Any notice or document shall be deemed served:
16.2.1 if delivered, at the time of delivery provided that,
if delivery takes place after 5.00pm or on a
Saturday, Sunday or a day which is a public holiday
in the jurisdiction of the party to be served,
delivery shall be deemed to have taken place on the
next business day;
16.2.2 if posted on the fifth day after posting; and
16.2.3 if sent by facsimile transmission, at the time of
transmission if before 5.00pm on Monday to Friday
(other than public holidays) or otherwise on the next
succeeding banking business day.
16.3 In proving service (without prejudice to any other means) it
shall only be necessary to prove:
11
<PAGE> 15
16.3.1 by post, that the notice or document was contained in
an envelope properly stamped and posted as provided
in this clause 16;
16.3.2 by facsimile transmission, that the notice or
document was duly received by production of a copy
facsimile bearing the addressee's answerback code or
automatic record of correct transmission.
17. COSTS
-----
Each party shall pay its own costs in relation to the negotiation,
preparation, execution and implementation of this agreement.
18. ENTIRE AGREEMENT
----------------
18.1 The Sale Documents constitute the entire agreement between the
parties in connection with their subject matter.
18.2 No party has relied upon any representation or warranty except
as expressly set out in the Sale Documents.
19. WAIVER OF RIGHTS BASED ON MISREPRESENTATIONS
----------------------------------------------
19.1 Each party unconditionally waives any rights it may have to
claim damages against the other on the basis of any statement
made by the other (whether made carelessly or not) not set out
or referred to in this agreement (or for breach of any
warranty given by the other not so set out or referred to)
unless such statement or warranty was made or given
fraudulently.
19.2 Each party unconditionally waives any rights it may have to
seek to rescind this agreement on the basis of any statement
made by the other (whether made carelessly or not) whether or
not such statement is set out or referred to in this agreement
unless such statement was made fraudulently.
19.3 The Sale Documents supersede any prior agreements,
understandings and arrangements between the parties and any
representations (oral or written) relating to the subject
matter of the Sale Documents.
12
<PAGE> 16
20. SURVIVORSHIP
------------
This agreement shall, as to any of its provisions remaining to be
performed in whole or in part or capable of having effect following
Completion (or any transfer of the Sale Shares), remain in full force
and effect despite Completion (or any transfer of the Sale Shares).
21. LAW AND JURISDICTION
--------------------
21.1 This agreement shall be governed by and construed in all
respects in accordance with English law.
21.2 The parties to this agreement irrevocably agree that the
English courts shall have exclusive jurisdiction to settle any
dispute which may arise out of or in connection with this
agreement and that, accordingly, any proceedings, suit or
action arising out of this agreement shall be brought in such
courts.
21.3 The Vendor irrevocably appoints the Vendor's Solicitors as its
agent to accept service of any process to be served on them in
relation to this agreement or anything arising out of it.
21.4 The rights set out in this clause 21 are in addition to any
other manner of service permitted by law.
IN WITNESS of which this agreement has been duly executed by the parties.
13
<PAGE> 17
SCHEDULE 1
----------
PART 1
------
THE COMPANY
-----------
Registered number: 1623460
Date of incorporation: 13 March 1982
Registered office: Enterprise House, 1B Roxborough Way, Foundation
Park, Cannon Lane, Maidenhead, Berkshire SL6 3UD
Share capital:
Authorised: (Pound)1,800,000 divided into:
Class Denomination Number
----- ------------ ------
Ordinary (Pound)1 1,800,000
Issued: (Pound)1,723,548 divided into:
Class Denomination Number
----- ------------ ------
Ordinary (Pound)1 1,723,548
Registered holders of shares: The Vendor 1,723,547
D J Tullio 1
Director: D J Tullio
Secretary: S E Deignan
Accounting reference date: 28 February
Auditors: Ernst & Young
Charges and debentures: Lloyds Bank plc
Debenture
14
<PAGE> 18
PART 2
------
TRADING SUBSIDIARIES
--------------------
A. Sabre Business Systems (NI) Limited
-----------------------------------
Registered in Northern Ireland no: NI 20027
Registered office: Ratheane House, 32 Hillsborough Road, Lisburn, Co
Antrim BT28 1AQ
Authorised share capital: 50,000 ordinary shares of (Pound)1 each
Issued share capital: (Pound)16,000
Shareholders: the Company
Directors: W C Millar, M Beatty
Secretary: M Beatty
B: Sabre Business Systems Limited:
-------------------------------
Registered in Ireland no: 107570
Registered office: 28 Corrig Road, Sandyford Industrial Estate,
Dublin 18
Authorised share capital: IR(Pound)50,000 divided into 50,000 ordinary
shares of IR(Pound)1 each
Issued share capital: IR(Pound)17,143
Shareholders: the Company
Directors: S Deignan, D J Tullio
Secretary: Elaine Museux
C: Sabre Software Developments Limited:
------------------------------------
Registered in Eire no: 123325
Registered office: 28 Corrig Road, Sandyford Industrial Estate,
Dublin 18
Authorised share capital: IR(Pound)50,000 divided into 50,000 ordinary
shares of IR(Pound)1 each
Issued share capital: 20,000 ordinary shares of IR(Pound)1 each
Shareholders: the Company - 2,500
Sabre Business Systems Limited - 17,500
Directors: S Deignan, D J Tullio
Secretary: Elaine Museux
15
<PAGE> 19
PART 3
------
DORMANT SUBSIDIARIES
--------------------
Alpha Micro Systems Video Technology Limited
Registered number: 1434407
Sabre Business Systems (UK) Limited
Registered number: 1925295
Alpha Micro Limited
Registered in Eire number: 103456
16
<PAGE> 20
SCHEDULE 2
----------
THE WARRANTIES
--------------
PART I
------
FINANCIAL/TAX WARRANTIES
------------------------
1. BOOKS AND RECORDS
-----------------
So far as the Vendor is aware, the Company has kept all accounts,
books, ledgers, financial and other records required by law to be kept
by it and these:
1.1 have been properly maintained and are up to date in all
material aspects;
1.2 are in the possession of the Company;
1.3 contain a proper record of all matters required by law to be
entered in them; and
1.4 do not contain or reflect any material inaccuracies or
discrepancies;
and no notice or allegation that any of them is incorrect or should be
rectified has been received.
2. AUDITED ACCOUNTS
----------------
The Audited Accounts:
2.1 show a true and fair view of the assets and liabilities of the
Company at the Accounts Date and of its profits or losses for
the period ended on that date; and
2.2 have been prepared using accounting methods, bases and
policies consistent with those adopted or applied in the
Company's audited balance sheet and profit and loss account
for the preceding financial year, consistently applied.
3. ASSETS AND CHARGES
------------------
3.1 The Company is the owner of and has good and marketable title
to all assets included in the Audited Accounts and all assets
which have been acquired by the Company since the Accounts
Date (except for current assets disposed of by the Company in
the ordinary course of its business).
3.2 No asset of the Company nor any of its undertaking, goodwill
or uncalled capital is subject to any Encumbrance or any
agreement or commitment to give or create any Encumbrance.
3.3 No asset is shared by the Company with any other person and
the Company does not depend for its business upon, or use, any
assets, facilities or services owned or supplied by the
Vendor.
17
<PAGE> 21
4. DEBTS DUE TO THE COMPANY
------------------------
4.1 So far as the Vendor is aware, save to the extent that the
Company has made provision for bad or doubtful debts, each of
the debts owed to the Company is good and collectable in the
ordinary course of business.
4.2 The Company has not factored or discounted any of its debts or
agreed to do so.
5. THE COMPANY'S BUSINESS SINCE THE ACCOUNTS DATE
----------------------------------------------
Since the Accounts Date:
5.1 the Company has carried on business in the ordinary and usual
course;
5.2 the Company has not borrowed or raised any money or taken any
financial facility;
5.3 the Company has paid its debts in accordance with its normal
practice;
5.4 the Company has not entered into, or agreed to enter into, any
capital commitments in excess of L10,000 in aggregate;
5.5 no share or loan capital has been issued or agreed to be
issued by the Company and no option has been granted for any
such issue;
5.6 no distribution of capital or income has been declared, made
or paid in respect of any share capital of the Company;
5.7 the business of the Company has not been materially adversely
affected by the loss of any important customer;
5.8 no Encumbrance has been created over any part of the assets of
the Company;
5.9 there has been no resolution of or consent by the members of
the Company or any class of them; and
5.10 the Company has not acquired or disposed of or agreed to
acquire or dispose of:
5.10.1 any business;
5.10.2 any asset (except current assets bought or sold in
the ordinary course of business).
6. MANAGEMENT ACCOUNTS
-------------------
The Management Accounts have been prepared with reasonable care and
using the accounting methods, bases and policies used in the
preparation of the Audited Accounts, consistently applied.
7. TAX PROVISIONS
--------------
Proper provision or reserve has been made in the Audited Accounts for
all Tax liable to be assessed on the Company whether as principal,
agent or trustee or for which it is accountable in respect of income,
profits or gains earned, accrued or received on or before the Accounts
Date or in respect of any event
18
<PAGE> 22
on or before the Accounts Date including distributions made down to
such date or provided for in the Audited Accounts and proper provision
has been made in the Audited Accounts for deferred Tax in accordance
with SSAP 15.
8. ADMINISTRATION AND RETURNS
--------------------------
The Company has, within the requisite time limits, duly made all
returns to the Inland Revenue and any other relevant United Kingdom or
other Tax Authorities all such returns were and remain complete and
accurate in all material respects and were made on the proper bases
and are not the subject of any dispute with the relevant authorities
and the Tax computations in respect of all periods up to and including
February 1995 have been agreed with all relevant authorities.
9. PAYMENT OF TAX
--------------
The Company has duly paid all Tax which it has become liable to pay
and is under no liability to pay any fine, penalty, surcharge or
interest in connection with any claim for Tax.
10. PAYE AND NATIONAL INSURANCE
---------------------------
The Company has properly operated the Pay As You Earn and National
Insurance systems deducting Tax as required by law from all payments
made, or treated as made, to employees and former employees of the
Company and has accounted to the Inland Revenue, DSS or Contributions
Agency (as the case may be) for all Tax so deducted and all Tax
chargeable on benefits provided for employees of the Company.
11. VAT
---
11.1 The Company is a registered and taxable person for the
purposes of VAT and no such registration is subject to any
condition imposed by or agreed with HM Customs and Excise.
11.2 The Company has complied in all material respects with all
statutory provisions, rules, regulations, orders and
directions and made all necessary returns in relation to VAT
and, within the prescribed time limits, has provided all
necessary information and documents to HM Customs and Excise
and paid all amounts due to the proper person.
11.3 The Company has at all times kept materially complete, correct
and up-to-date records, invoices and other documents required
for the purposes of VAT.
11.4 The Company is not liable to any interest, penalty or
surcharge in respect of VAT.
11.5 The Company is not and has not at any time been a member of a
group of companies for VAT purposes.
12. CLOSE COMPANY
-------------
The Company is a close company within the meaning of section 414 of
the Taxes Act.
19
<PAGE> 23
13. RESIDENCE
---------
The Company is and always has been resident in the United Kingdom for
the purposes of the Taxes Act.
14. GROUP MATTERS
-------------
14.1 The Disclosure Letter contains particulars of all elections
made by the Company under Section 247 of the Taxes Act and
such election was in force prior to Completion.
14.2 The Disclosure Letter contains particulars of all arrangements
and agreements relating to group relief (as defined by Section
402 of the Taxes Act) to which the Company is or has (within
the period of six years) been a party and all claims by the
Company for group relief were, when made valid and have been
or will be allowed in full by way of relief from corporation
tax;
14.3 The Company has not acquired any asset from any other Company
then belonging to the same group of companies as the Company
within the meaning of section 170 of the TCGA.
20
<PAGE> 24
PART II
-------
GENERAL WARRANTIES
------------------
1. INTER-COMPANY DEBT
------------------
Upon and subject to completion of the transactions specified in
Schedule 3, there will be no amounts due to the Vendor or any person
now or formerly connected with the Vendor other than in the ordinary
and proper course of trading.
2. LIABILITIES OWING TO OR BY THE VENDOR
-------------------------------------
(Save for the Inter-Company Debt and for liabilities arising from
trading in the ordinary course of business) there is no outstanding
debt or other liability (actual or contingent) owing by the Company to
the Vendor or any person now or formerly connected with it, nor is
there any debt owing to the Company by the Vendor or any such person.
3. CONSEQUENCE OF SHARE ACQUISITION BY THE PURCHASER
-------------------------------------------------
So far as the Vendor is aware, the acquisition of the Sale Shares by
the Purchaser:
3.1 will not cause the Company to lose the benefit of any right it
presently enjoys; and
3.2 will not relieve any person of any contractual obligation to
the Company or enable any person to determine any obligation
by or to the Company or any right enjoyed by the Company or to
exercise any right under any agreement with or otherwise in
respect of, the Company.
4. OPTIONS ETC
-----------
No person has the right (whether exercisable now or in the future and
whether contingent or not) to call for the allotment, issue, sale or
transfer of any share or loan capital of the Company under any option
or other agreement (including conversion rights and rights of
pre-emption).
5. REGISTERED AND OTHER PARTICULARS
--------------------------------
The particulars of the Company and the Subsidiaries in Schedule 1 are
complete and accurate.
6. SHARE CAPITAL
-------------
The Sale Shares represent the entire issued share capital of the
Company and there are no options or other agreements outstanding which
call for the issue of or accord to any person the right to call for
the issue of any shares in the capital of the Company.
7. MEMORANDUM AND ARTICLES OF ASSOCIATION
--------------------------------------
7.1 The copy of the memorandum and articles of association of each
member of the Group attached to the Disclosure Letter is true
and complete and includes or has attached to it a copy of
every such resolution or agreement as is referred to in
section 380 Companies Act 1985.
7.2 Each member of the Group has at all times carried on its
business and affairs in all material respects in accordance
with its Memorandum and Articles of Association.
21
<PAGE> 25
8. COMPLIANCE WITH LAWS
--------------------
So far as the Vendor is aware, the Company has conducted its business
in all material respects in accordance with all laws statutes
regulations or directives of the European Union applicable in the
United Kingdom (including those made or issued pursuant to the
Treaties of Rome, Paris and Maastricht) and any relevant foreign
country.
9. LICENCES ETC
------------
So far as the Vendor is aware, all necessary licences, consents,
permits and authorities (public and private) have been obtained by the
Company to enable the Company to carry on its business effectively in
the places and in the manner in which that business is now carried on,
and so far as the Vendor is aware, they are all valid and subsisting
and there is no reason why any of them should be suspended, cancelled
or revoked.
10. LITIGATION AND CONTRACTUAL PERFORMANCE
--------------------------------------
No criminal prosecution or arbitration or litigation proceedings or
dispute resolution procedures are pending or threatened by or against
the Company (or, so far as the Vendor is aware, any of its officers or
employees in relation to their duties with the Company or for which it
may be vicariously liable) and so far as the Vendor is aware there are
no facts likely to give rise to any such prosecution litigation,
arbitration or dispute.
11. FINANCE OBLIGATIONS
-------------------
The Company does not have outstanding:
11.1 any loan, loan capital or other liability in the nature of
borrowings (including but not limited to acceptance credits,
unmatured bills or other commercial paper) which will or may
result in the Company being liable to make any payment or
incur any other liability;
11.2 any guarantee, indemnity, suretyship or other arrangement
under which the Company is or may become liable for any
obligation of any other person (other than another member of
the Group);
11.3 any factoring or similar agreement;
11.4 any indebtedness except trade creditors in the ordinary course
of business;
11.5 any bond.
12. REPAYMENT REQUIREMENTS
----------------------
The Company has received no notice to repay any monies or liabilities
which are repayable on demand and so far as the Vendor is aware no
default or event has occurred entitling any person (with or without
giving any formal notice and whether immediately or after expiry of
any notice) to demand or accelerate repayment, appoint a receiver or
take other action to protect security granted to it by the Company.
22
<PAGE> 26
13. INSOLVENCY
----------
13.1 No receiver or administrative receiver has been appointed in
respect of the Company or any of the assets or undertaking of
the Company.
13.2 No administration order has been made and no petition has been
presented for such an order in respect of the Company.
13.3 No meeting has been convened at which a resolution will be
proposed, no resolution has been passed, no petition has been
presented that remains undischarged and no order has been made
for the winding-up of the Company.
13.4 No unsatisfied judgment, order or award is outstanding against
the Company.
13.5 No written demand under section 123(1)(a) of the Insolvency
Act 1986 made against the Company remains outstanding.
13.6 No distress or execution has been levied on, or other process
commenced against, any asset of the Company.
13.7 No voluntary arrangement has been proposed under section 1 of
the Insolvency Act 1986 in respect of the Company.
14. INSURANCE
---------
14.1 Particulars of all the insurance policies maintained by the
Company at the date of this agreement are disclosed in the
Disclosure Letter.
14.2 All premiums due in respect of those insurance policies have
been fully paid and the next renewal date for each of such
insurances is as specified in the Disclosure Letter.
14.3 As far as the Vendor is aware all those insurance policies are
currently in full force and effect and there are no
circumstances which may lead to liability under any such
insurances being avoided by the insurers.
14.4 No claim is outstanding under any of the insurances and, so
far as the Vendor is aware no circumstances exist which are
likely to give rise to any such claim.
15. CONTRACTS
---------
15.1 The Company is not party to any material subsisting agreement
entered into otherwise than by way of bargain at arms length
in the ordinary and proper course of its business.
15.2 So far as the Vendor is aware, there are no facts, matters or
circumstances which are likely to result in any material claim
being made under or pursuant to any guarantee, warranty or
penalty provision in any contract entered into by the Company.
16. INTELLECTUAL PROPERTY RIGHTS
----------------------------
16.1 The Company is the sole beneficial owner of or has a valid
licence to use the Intellectual Property used by it in its
business.
23
<PAGE> 27
16.2 Except for copyrights, the Company owns no Intellectual
Property other than that detailed in the Disclosure Letter.
16.3 Except as specified in the agreements disclosed in the
Disclosure Letter:
16.3.1 no person has been authorised to make any use
whatsoever of any Intellectual Property owned by the
Company;
16.3.2 the Company has not been authorised to make any use
of any Intellectual Property owned by any other
person.
16.4 The Intellectual Property Rights in the SWORDS software
product are owned by the Group free from Encumbrances.
17. EMPLOYMENT TERMS
----------------
17.1 Material particulars are contained in the Disclosure Letter of
all current contracts of service with or other terms of
employment of directors and other employees of the Company and
of all current consultancy agreements or contracts for
services with the Company.
17.2 No director or employee of the Company has given notice
terminating his contract of employment or is under notice of
dismissal.
17.3 The Company has not entered into, agreed to or undertaken any
legally binding obligation to take effect at any time on or
after the Accounts Date to alter the rates of remuneration of
or to make any bonus or incentive payments or provided any
benefits in kind or any payments under a profit sharing scheme
to or on behalf of any of its directors or employees at any
future date.
18. PENSION ARRANGEMENTS
--------------------
18.1 (Except for the Scheme and for the national insurance scheme)
there are no pension schemes to which the Company contributes
for or in respect of any of the employees or officers of the
Company.
18.2 The persons listed in the Disclosure Letter are the only
employees or officers of the Company who are members of the
Scheme.
18.3 The Disclosure Letter details the current contribution rates
payable by the Company to the Scheme in relation to such
employees or officers.
18.4 The Scheme is exempt approved within the meaning of Chapter I
of Part XIV of the Income and Corporation Taxes Act 1988.
19. SUBSIDIARIES AND SUBSIDIARY UNDERTAKINGS
----------------------------------------
19.1 The Company does not have any subsidiary company or subsidiary
undertaking (other than the Subsidiaries).
19.2 Each of the Dormant Subsidiaries is dormant (within the
meaning of section 250 of the Companies Act 1985) and has no
assets or liabilities (actual or contingent) other than as
detailed in its Audited Accounts.
24
<PAGE> 28
19.3 Each of the Subsidiaries is a wholly owned subsidiary of the
company and there are no options or other agreements
outstanding which call for the issue of or accord to any
person the right to call for the issue of any shares in the
capital of the Subsidiaries.
20. PROPERTY
--------
20.1 The Company does not have any interest in any freehold or
leasehold property, other than the Properties.
20.2 So far as the Vendor is aware, the Company is not actually or
contingently liable as (or as guarantor of) an original
contracting party to any lease of freehold property.
21. DISCLOSURE
----------
So far as the Vendor is aware, the information given in the Disclosure
Letter is true and accurate in all material respects, is fairly
presented and is not misleading because of any omission or ambiguity
or for any other reason.
25
<PAGE> 29
SCHEDULE 3
----------
COMPLETION REQUIREMENTS
-----------------------
1. The Vendor shall deliver or procure to be delivered to the Purchaser
(where appropriate as agent for the Group):
1.1 duly executed transfers in favour of the Purchaser or its
nominees of all the Sale Shares together with share
certificates for the Sale Shares and all issued shares in the
Subsidiaries;
1.2 the common seal and certificates of incorporation, any
certificates of incorporation on change of name and the
statutory books of the Company and the Subsidiaries made up to
Completion;
1.3 the Tax Covenant in agreed terms duly executed by each party
(other than the Purchaser) in escrow pending Completion;
1.4 the written resignation in agreed terms of Mr D Tullio as a
director of all members of the Group with an effective waiver
of any statutory employment claims or rights or binding
acknowledgements that there are no such rights or claims;
1.5 evidence that no charge affecting the Company, the
Subsidiaries or any of their assets has crystallized or become
enforceable.
2. The Vendor shall procure that resolutions of the sole director of the
Company are passed pursuant to which the director shall validly:
2.1 appoint such persons as the Purchaser may nominate as
additional directors of the Company;
2.2 approve the share transfers and vote in favour of the
registration of the Purchaser or its nominees as members
(subject only to due stamping where necessary);
2.3 authorise the issue of share certificates to the new members;
2.4 (if required by the Purchaser) change the registered office of
the Company to the place specified by the Purchaser;
2.5 amend the mandates and authorities in respect of the Company's
bank accounts as the Purchaser may require;
2.6 (if required by the Purchaser) change the accounting reference
date of the Company as specified by the Purchaser; and
2.7 accept the resignation of the resigning director of the
Company.
3. On completion of the matters set out in paragraphs l and 2, the
Purchaser shall:
3.1 deliver to the Vendor a counterpart of the Tax Covenant;
3.2 procure the allotment and issue to the Vendor of the
Consideration Shares and the delivery of a share certificate
therefor;
26
<PAGE> 30
3.3 procure that the Company shall settle the Inter-Company Debt
by:
3.3.1 assigning to the Vendor the AMB Note;
3.3.2 assigning to the Vendor all of the Company's interest
in the Spyder licence; and
3.3.3 paying the sum of L200,000 in cash by credit transfer
to a bank account designated by the Vendor.
4. The parties agree to procure that the Vendor and the Company shall
enter into the AMOS Agreement.
5. The parties agree to procure that the Vendor and the Company shall
enter into the agreement in agreed terms relating to the trading and
related arrangements concerning Omegon Computer Systema BV and Alpha
Microsystems Belgium SA.
27
<PAGE> 31
SCHEDULE 4
----------
THE PROPERTIES
--------------
1. All that property comprised in a lease between (1) Severn-Trent Water
Authority and (2) the Vendor relating to part of the ground floor of
building number 2 Foundation Park, Cannon Lane, Maidenhead, Berkshire,
(1B Roxborough Way).
2. Leasehold property at Unit 4 "The Moses Gate Workshops", Manchester
Road, Bolton comprised in a lease dated 13 October 1993 between (1)
the Borough Council of Bolton and (2) the Vendor.
3. Leasehold property at Unit 5 "The Moses Gate Workshops", Manchester
Road, Bolton comprised in a lease dated 13 October 1993 between (1)
the Borough Council of Bolton and (2) the Vendor.
4. Greyfriars, Leicester.
5. McMillan House, Edgewater Office Park, Edgewater Road, Belfast BT3
9JQ.
6. 28 Corrig Road, Sandyford Industrial Estate, Dublin 18.
28
<PAGE> 32
SCHEDULE 5
----------
VENDOR PROTECTION
-----------------
1. The provisions of this Schedule apply despite (and prevail over) any
other provision of the Sale Documents and are in addition and without
prejudice to the Purchaser's general legal obligation to mitigate any
loss or damage it may suffer.
2. The Purchaser:
2.1 confirms that, in entering into this agreement, it relies on
no warranties, representations, covenants, undertakings,
indemnities or other information except the Warranties and the
Tax Covenant;
2.2 agrees that (except as expressly set out or referred to in the
Disclosure Letter) no information, advice or assurances it or
anyone on its behalf may have received from the Vendor, its
advisers or anyone else on its behalf in relation to the
Company or otherwise in relation to this agreement or its
negotiations may be legally relied upon in any manner;
2.3 waives any rights it may have in respect of any information,
advice or assurance it may have received other than that
expressly set out in the Warranties and the Tax Covenant; and
2.4 agrees that rescission shall not be available as a remedy for
any breach of this agreement and agrees not to claim that
remedy.
3. The Purchaser shall not be entitled to make a Claim if and to the
extent that:
3.1 the facts or information upon which it is based are disclosed
in the Disclosure Letter;
3.2 the facts or information upon which it is based are actually
known to the Purchaser at Completion (whether as a result of
its investigation of the Company or otherwise).
4. The Purchaser shall not be entitled to make a Claim to the extent
that:
4.1 provision or reserve (including any provision or reserve in
respect of deferred Tax) or a note disclosing the matter to
which it relates (or the existence or possibility of any
resulting liability) has been made in the Audited Accounts;
4.2 provision or reserve or a note disclosing the matter to which
it relates has been made in the Audited Accounts which is
insufficient by reason only of any increase in rates of Tax or
change in the law or published practice of any Tax Authority
after the date of those accounts having retrospective effect;
4.3 it arises only as a result of the retrospective imposition of
Tax by a change in the interpretation of law or as a result of
the change or withdrawal of any previously published practice
or concession or as a result of a change in the practice or
policy of any Tax Authority made after the Accounts Date;
29
<PAGE> 33
4.4 it is a claim for which the Company is or may become liable as
a result of transactions (including distributions and dealings
in capital assets) entered into by the Company in the ordinary
course of business after the Accounts Date;
4.5 it would not have arisen but for the failure or omission by
the Company to make any claim, election, surrender or
disclaimer, give any notice or consent or do any other thing
in relation to Tax, the making, giving or doing of which was
assumed in computing the Tax liabilities of the Company for
the purposes of the Audited Accounts or the voluntary making
of any claim election, surrender or disclaimer or voluntary
giving of any notice or consent by the Purchaser or the
Company after Completion, the giving, making or doing of which
was not assumed in computing those liabilities;
4.6 it is in respect of a liability to Tax which the Company is
entitled not to pay or would be entitled not to pay by the
exercise or acceptance of any available election, right of
relief, credit, set-off, surrender or deduction (which relates
to any period, transaction or event before Completion) and
does not become available to the Company only as a result of
it being acquired by the Purchaser including for the avoidance
of doubt the set-off of tax losses arising in respect of any
period before Completion;
4.7 it is due to any change after Completion in the accounting
principles, bases, policies and methods adopted by the Company
from those used in the preparation of the Audited Accounts;
4.8 any tax losses, allowances, credits, set offs or reliefs which
may be believed to be available for carry forward by the
Company prove not to be so available or not to be useable.
5. The Purchaser shall not be entitled to make a Claim to the extent that
the matter to which it relates:
5.1 has been or is made good or is otherwise compensated for
without cost;
5.2 is recovered by the Group from insurers;
5.3 arises as a result of the passing or amendment of any
legislation (including any subsidiary legislation) after
Completion with retrospective effect.
5.4 would not have arisen but for a voluntary act or transaction,
which:
5.4.1 could reasonably have been avoided or carried out by
the Purchaser (or persons deriving title from the
Purchaser) or the Group after Completion;
5.4.2 is carried out at the request of or with the
approval, concurrence or assistance of the Purchaser;
5.4.3 is provided for in, or carried out to comply with,
the terms of, or give effect to, this agreement.
6. Unless the Purchaser can show that there has been fraud or deliberate
non-disclosure by the Vendor, the Purchaser shall have no right to
recover in respect of any Claim unless and until the aggregate
liability of the Vendor (but for this paragraph) in respect of all
Claims would exceed L50,000, but, if such aggregate liability should
exceed that sum, the Vendor shall be liable for only for the amount by
which the Claim exceeds that sum.
30
<PAGE> 34
7. Unless the Purchaser can show that there has been fraud or deliberate
non-disclosure by the Vendor, the maximum liability of the Vendor in
respect of all Claims shall not exceed (Pound)800,000.
8. Unless the Purchaser can show that there has been fraud or deliberate
non-disclosure by the Vendor, the Vendor shall not be liable in
respect of any Claim unless particulars of that Claim (with sufficient
detail to enable the Vendor to identify the basis of the Claim and the
Purchaser's best estimate of the quantum of the Claim and how this has
been quantified) are given in writing to the Vendor:
8.1 in respect of any Claim other than a Tax Claim not later than
30 April 1998 and, in respect of any Tax Claim, not later than
the sixth anniversary of the Completion Date;
8.2 unless the Claim has been notified to the Vendor as soon as is
reasonably practicable after the Purchaser has become aware of
any matter entitling it to make the Claim.
9. Any Claim shall be unenforceable and be deemed waived unless
proceedings in respect of it are issued and served within six months
of the date of service of notice of that Claim on the Vendor under
paragraph 8 unless the Vendor otherwise agrees.
10. The Vendor shall not be liable to make any payment in respect of any
Claim based upon a contingent liability of the Company (without
prejudice to the Purchaser's right to establish the Vendor's liability
in respect of that Claim) until the liability becomes an actual
liability and is paid and the Vendor is given satisfactory evidence of
that payment.
11. Any benefit accruing to the Purchaser or the Company (including
without limitation any right to reduce any liability to Tax) as a
result of the existence of the circumstances giving rise to the Claim
shall be quantified and its value deducted from the amount of the
Claim.
12. If the Company or the Purchaser is or becomes entitled to be
indemnified by or to recover from any other person (including any Tax
or other authority) in respect of a matter which would (apart from
this paragraph) give rise to a Claim, the Purchaser shall procure
that:
12.1 the Vendor is notified immediately the Company or the
Purchaser becomes aware of the possible entitlement;
12.2 before enforcing that Claim against the Vendor and subject to
the Vendor indemnifying the Purchaser to its reasonable
satisfaction against the costs incurred, all steps are taken
which the Vendor requests to enforce the indemnity or right of
recovery or (but only if the Vendor so chooses) the Vendor is
permitted (whether before or after making payment of any
Claim) to enforce the indemnity or right of recovery (in the
name of the Company or other person entitled to do so) and is
given all authorities and assistance as it may request to
enable it to do so.
13. If the Company or the Purchaser becomes entitled to recover any sum
from any person in respect of the subject matter of any Claim in
respect of which the Vendor has made any payment to the Purchaser, the
provisions of paragraph 12 of this Schedule shall apply mutatis
mutandis to that entitlement and the Purchaser shall pay to the Vendor
immediately the amount of the liability of the person (if any) is
established or agreed (or permit the Vendor to retain) a sum equal to
the lesser of:
13.1 any amount the Company or the Purchaser is entitled to recover
(net of all costs and expenses reasonably and properly
incurred by it in pursuing the claim against the other
person); and
13.2 the amount paid by the Vendor in respect of the Claim.
31
<PAGE> 35
14. The provisions of clauses 4 and 5 of the Tax Covenant shall apply
mutatis mutandis in respect of a claim for breach of warranties 8 to
14 in Schedule 2 Part I of this Agreement.
15. Insofar as the payments made by the Vendor to the Purchaser in respect
of Claims are less than the Consideration they shall constitute a
repayment of and a reduction in the Consideration.
16. The Purchaser shall (at the Vendor's cost) take such action and give
such information and assistance as the Vendor may by notice request to
avoid, dispute, resist, appeal or compromise any Tax Claim including
but not limited to:
16.1 procuring the Company or the Purchaser to apply to postpone
(so far as legally possible) the payment of any Tax;
16.2 allowing the Vendor (at the Vendor's own expense) to conduct
all proceedings of whatever nature arising in connection with
the Tax Claim in question.
17. If the Vendor takes on or takes over the conduct of any proceedings,
the Purchaser shall procure that the Company shall provide any
information and assistance the Vendor may reasonably require in
connection with the preparation for and conduct of those proceedings
including but not limited to access to all documents, records and
personnel relevant to those proceedings.
18. If any matter or circumstance which may give rise to a Claim comes to
the attention of the Company or the Purchaser, the Purchaser shall
(without prejudice to paragraph 8):
18.1 ensure that no admission or liability or agreement or
compromise in relation to the matter or circumstance is made
without the written consent of the Vendor (not to be
unreasonably withheld or delayed);
18.2 give the professional advisers of the Vendor such access to
the premises and personnel of the Company as it may request,
and afford it any opportunity it requests to examine any
relevant accounts, documents, records and other things in the
possession or control of the Company
18.3 before enforcing any Claim against the Vendor, take reasonable
steps to avoid, dispute resist, appeal, compromise or defend
any matter which may otherwise result in a Claim and give the
Vendor all authorities and assistance as may be reasonably
requested by the Vendor to enable it to do so.
19. The Purchaser shall not be at liberty to bring more than one Claim in
respect of the same subject matter. Any liability of the Vendor in
respect of a Warranty Claim shall be in satisfaction of its liability
under any Indemnity Claim in respect of the same facts or
circumstances and vice versa.
32
<PAGE> 36
Signed by /s/ Michael J. Lowell
-------------------------
duly authorised on behalf of
the Vendor
Witness: Peter White
Name: Peter White
Address: 15 Heronsford
Northampton
WNY 9X9
Signed by /s/ Chris Winn
------------------------
duly authorised on behalf of
the Purchaser
Witness: R.S. Pawson
Name: Bank Top House
Address: Beech Tree Court
Baildon, N York
33
<PAGE> 1
EXHIBIT 99
[ALPHA MICROSYSTEMS LETTERHEAD]
FOR RELEASE AUGUST 12, 1996, 7:30 AM EDT
Contact: Erik Randerson (investors) or Denny Michael
Owen Daley (media) [email protected]
Allen & Caron/South Coast Communications Alpha Microsystems
714/252-8440 714-641-6373
http://www.alphamicro.com
ALPHA MICROSYSTEMS SELLS GREAT BRITAIN SUBSIDIARY
TO SANDERSON ELECTRONICS PLC
SANTA ANA, CA (August 12, 1996) . . . . . ALPHA MICROSYSTEMS (Nasdaq NM:ALMI)
announced today that it has agreed to sell its UK subsidiary, Alpha Microsystems
Great Britain (AMGB) together with AMGB's subsidiaries Sabre Business Systems
Limited based in Dublin and Sabre Business Systems (NI) Limited based in
Belfast, to Sanderson Electronics PLC for approximately $2.1 million. The
purchase price will be satisfied by the issuance of 907,792 shares of Sanderson
Electronics PLC to Alpha Microsystems. The stock, valued at approximately $2.38
per share, is unrestricted and is traded on the London Stock Exchange.
Alpha Micro President and CEO Douglas J. Tullio commented, "We believe
that this provides an excellent opportunity to further enhance the sales of our
products in Great Britain through a successful UK company with access to
substantial management and marketing resources. This will also allow Alpha Micro
to concentrate its resources on its growing US services operation and its newly
announced AlphaCONNECT family of Internet/intranet products."
Tullio indicated that Alpha Micro and Sanderson have agreed to discuss
further strategic alliances between the two companies. Tullio continued, "A
strategic alliance
MORE-MORE-MORE
<PAGE> 2
ALPHA MICROSYSTEMS SELLS SUBSIDIARY
PAGE 2-2-2
with Sanderson would provide an outstanding opportunity to launch our
AlphaCONNECT family of products into the international marketplace by a well
established international sales and marketing organization."
Sanderson, a UK company with 1995 revenues in excess of $88 million, is
a leading supplier of computer solutions with an extensive portfolio of
application software packages operating on a wide variety of hardware platforms.
The Company employs 750 people in locations throughout the United Kingdom,
Australia, New Zealand, East Asia and North America.
Alpha Microsystems serves the Internet and corporate intranet markets
through its software, services and technologies. The Company also provides
products and services such as consulting, maintenance, software, hardware and
networking, both directly and through value-added resellers and distributors.
Alpha Microsystems has been in business for over 18 years and today has over 40
locations, as well as third party distribution channels worldwide. For more
information, contact the Company's Web site at : http://www.alphamicro.com.
# # # #
